FOREX Newsletter
Pulse of the Market
· Greenback at high risk of reversal unless aggressive Euro selling or risk aversion start to happen
· Euro once again calmed down by empty words of stability from officials and poor Greek auction
· British Pound investors might make up for the lack of BoE reaction with the quarterly report
· Canadian Dollar makes use of inspiration from the rebound in oil and looks ahead to trade
The U.S Dollar ended yesterday’s trading session almost unchanged against the basket of major currencies regardless of rising commodities and equities. A report showing that import prices are gaining at a faster pace than expected, prompted investors to focus on the coming end of the Fed's QE2 program and the potential for higher interest rates in the U.S soon following. The import price index gained by 2.2% month over month and 11.1% year over year, versus 1.8% and 10.4% expected respectively. While interest rate differentials will make it difficult for the U.S Dollar to post substantial gains in the near term, expectations of tighter U.S monetary policy and a worsening outlook for the Euro Zone's periphery economies may support the Greenback in the longer term. The Euro slightly strengthened in yesterday’s trading session after failing to break below 1.4250 twice in the past two trading sessions. The outlook for the Single Currency has been severely marked by persistent concerns over the members' debt outlooks. Greece appears to be edging ever closer to default on its debt and a possible exit from the Euro Zone all together. Moreover, German officials insisted that a restructuring of Greek debt has not been discussed. However, a report showing that Chinese imports slowed more than expected in April has also weighed on the Single Currency as demand for German exports in particular has played an increasingly pivotal role in Euro Zone economic growth. Cable traded lower yesterday on speculation that the BoE will lower its economic growth forecasts. Regardless of steadily high inflation in the U.K and slower economic growth would make tighter monetary policy even less likely. The British Pound extended its declines even after data showed that U.K retail sales and house prices both rose in April. Expectations on higher borrowing costs have now been reduced to the lowest levels of the year, with investors currently pricing in only a 0.25% increase in the BoE's benchmark rate by 2012. The Japanese Yen and Swiss Franc both declined against all of their major counterparts as global equities moved into the black.
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
02:00 | CNY Consumer Price Index (YoY) (APR) | High | 5.3% | 5.2% | 5.4% |
05:00 | JPY Leading Index (MAR) | Low | 99.8 | 104.2 | |
06:00 | EUR German Consumer Price Index (MoM) (APR) | Medium | 0.20% | 0.20% | |
08:30 | GBP Visible Trade Balance (Pounds) (MAR) | Medium | -£7500 | -£6776 | |
09:30 | Bank of England Inflation Report | High | |||
11:00 | USD MBA Mortgage Applications (MAY 6) | Low | 4.0% | ||
12:30 | CAD International Merchandise Trade (Canadian Dollar) (MAR) | Medium | 0.4B | 0.0B | |
12:30 | USD Trade Balance (MAR) | Medium | -$47.0B | -$45.8B | |
23:50 | JPY Trade Balance - BOP Basis (Yen) (MAR) | Medium | ¥305.0B | ¥723.3B |
Euro
The Single Currency was able to recover from recent heavy selling yesterday finding support under 1.4300 and closing above 1.4400 as fears about Greece subsided. Fine EUR/JPY buying on the back of risk on trading helped underpin the move higher. Overall the EUR/USD traded with a low of 1.4269 and a high of 1.4411 before closing the day around 1.4409 in the New York session.
Yen
The Japanese Yen pushed to topside resistance at 81.00 Yen and is threatening to break higher with stronger Yen crosses. The outlook for the major will be closely linked with U.S data and stock markets with any double dip talk leading to more downside pressure. Overall the USD/JPY traded with a low of 80.14 and a high of 80.89 before closing the day around 80.87 in the New York session.
British Pound
The British Pound failed to track the rest of the market underperforming on strong EUR/GBP buying. The important cross edged back above 0.8800. GBP/JPY posted a better ending above 132.00 and looking to confirm a bottom which has been put in place. Overall the GBP/USD traded with a low of 1.6315 and a high of 1.6420 before closing the day at 1.6362 in the New York session.
Canadian Dollar
The Canadian Dollar climbed for a third straight trading session as rising global equities encouraged risk taking, and resurgent oil, Canada's main export, provided additional support. Commodity prices continued to rebound after Friday's steep declines with oil reaching $103 a barrel and gold gaining to $1516. Overall, the USD/CAD traded with a low of 0.9566 and a high of 0.9651 before closing the day at 0.9567 in the New York session.
Australian Dollar
The Australian Dollar was very strong rallying after impressive March Trade balance numbers which showed 1.7bn vs. 0.4bn Forecast and a positive change in investor sentiment. Resistance at 1.0800 was broken and tested 1.0850 by the close of the U.S session. Overall the AUD/USD traded with a low of 1.0735 and a high of 1.0849 before closing the day at 1.0836 in the New York session.
Euro-Yen
EUR/JPY is trading below 14, 50 and above 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The RSI is above 41 and lies below the neutral zone. Overall, the cross has gained 0.98%.
Sterling-Yen
Currently GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing bullish and MACD is indicating a bearish stance. The RSI is above 42 reading and lies below the neutral zone. The pair has gained 0.42%.
Aussie-Yen
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bullish and MACD is indicating a bearish stance. The RSI is above 53 reading and lies above the neutral region. The pair has gained 0.97%.
Euro-Sterling
This cross is trading below 14 and above 50, 100 days moving average. Fast stochastic is indicating a bearish and MACD is also issuing a bearish signal. The RSI is above 47 reading and lies below the neutral region. The pair has gained 0.56%.
Sterling-Swiss
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The RSI is above 43 and lies below the neutral region. The pair has gained 0.71%.
Appendix
Daily Pivot Points | |||||||
Trading Range | |||||||
Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
EUR/USD | 1.4164 | 1.4246 | 1.4383 | 1.4465 | 1.4602 | 1.4684 | 1.4821 |
USD/JPY | 81.32 | 81.78 | 82.17 | 82.63 | 83.02 | 83.48 | 83.87 |
GBP/USD | 1.6212 | 1.6259 | 1.6331 | 1.6378 | 1.6450 | 1.6497 | 1.6569 |
USD/CHF | 0.8707 | 0.8791 | 0.8834 | 0.8918 | 0.8961 | 0.9045 | 0.9088 |
USD/CAD | 0.9424 | 0.9460 | 0.9491 | 0.9527 | 0.9558 | 0.9594 | 0.9625 |
EUR/JPY | 116.52 | 117.38 | 118.64 | 119.50 | 120.76 | 121.62 | 122.88 |
GBP/JPY | 133.64 | 134.15 | 134.79 | 135.30 | 135.94 | 136.45 | 137.09 |
CHF/JPY | 90.87 | 91.29 | 92.13 | 92.55 | 93.39 | 93.81 | 94.65 |
AUD/JPY | 85.68 | 86.24 | 87.34 | 87.90 | 89.00 | 89.56 | 90.66 |
EUR/GBP | 0.8696 | 0.8737 | 0.8794 | 0.8835 | 0.8892 | 0.8933 | 0.8990 |
EUR/CHF | 1.2776 | 1.2831 | 1.2862 | 1.2917 | 1.2948 | 1.3003 | 1.3034 |
GBP/CHF | 1.4386 | 1.4472 | 1.4518 | 1.4604 | 1.4650 | 1.4736 | 1.4782 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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